The Committee on Capital Markets Regulation (CCMR), an independent, non-partisan research organization and a leading proponent of carefully considered financial regulatory reform, has proposed a comprehensive approach to reforming regulatory oversight of derivatives markets to reduce systemic risk in the financial system, through greater use of derivatives clearinghouses, to be overseen by the Federal Reserve.

Meaningful financial regulatory reform depends on reducing the risks posed by over-the-counter derivatives. We’ve all heard the charges that on the topic of derivatives, there is substantial disagreement among industry participants. Nonetheless, the atmosphere of this debate has changed dramatically since last spring. The CCMR includes a diverse array of financial market participants with diverse views on many financial and market related issues, but as our letter and release demonstrate, there is now agreement on many of the core problems and the needed solutions. Specifically, CCMR members agree that the most effective approach to reducing systemic risk centers on well-capitalized, closely monitored and effectively regulated clearinghouses comprised of market participants. Such clearinghouses will spread out the risk of counterparty defaults, thus avoiding chain reactions of financial institution failures…(continue reading)